As a matter of fact, Trump did not deny that he was trying to influence politicians with contributions but rather argued that the fact the he is someone “who knows the system better than anyone” is the reason that he knows what to do in order to fix campaign financing. Still, even Trump, no later than May 2016, started to raise money from the very wealthy few. And he has no policy proposal for how to reform the system.

Doron Navot

It is natural to blame Clinton and Trump for not proposing a comprehensive reform, andto be suspicious towards politicians.But as a matter of fact, the academic literature shows that we have all the reasons to be skeptical and not necessarily because of politicians or lack of political will. The problems of regulating the system go much deeper, as shown invast articles in political science, countless examination by jurists of the Court’s decision, and empirical policy analysis that has been done with growing intensity since the 1970s.

Even a cursory survey of the history of regulation suggests that to blame politicians solely would be wrong. While campaign financing and its regulation are not new,11)For the history of campaign financing regulation before 1972, see: Urofsky 2008. of utmost importance is the Federal Election Campaign Act (FECA) of 1971, the first major federal election campaign reform legislation since 1925. Two years later, following Watergate, Congress passed key amendments to FECA and put forward the most sweeping campaign finance regulations in American history (FECA amendments).12)Federal Election Campaign Act Amendments of 1974, Pub. L. No. 93-443, 88 Stat.

FECA and FECA amendments set four basic modes of regulation: expenditure restrictions, contribution restrictions, public financing, and disclosure requirements. On the other hand, FECAamendments allowed corporations to set up separately funded political action committees (PACs) and to make expenditures in connection with federal candidates and contributions to campaigns.

The most comprehensive regulation of campaign finance in American politics was never implemented as is,13)Buckley v. Valeo, 424 U.S. 1 (1976). but not because of politicians or their will. In Buckley v. Valeo, given on January 30, 1976, the Court upheld the constitutionality of the contribution limits, a system for the voluntary public financing of presidential elections, and the disclosure requirements (and thus increased the availability of data also for research). But the Court also upheld campaign finance regulation only when the government demonstrated that the laws were closely drawn to prevent reality or the appearance of corruption(and that promoting equality is not a legitimate goal for regulation of campaign finance).

Because the Court interpreted corruption narrowly, it held thatuncoordinated spending by individuals and entities in elections as long as they are not coordinated with parties of candidates (independent expenditures) could not corrupt candidates or create the appearance of corruption. That is, the court struck down one of the major features of FECA amendments: the limitation on independent expenditures. According to the reasoning of the Court, then, shifting money from contributions to expenditures increases expressive efficiency while at the same time decreasing corruption. Although campaign financing has changed dramatically since 1976,the Court has never overruled Buckley’s framework.

The court was also the one who thwarted another sweeping campaign finance regulation, the Bipartisan Campaign Reform Act of 2002 (BCRA), and not necessarily because of politicians’ fault. It all started in the late 1970s when players circumvented spending and disclosure requirements through so-called “issue advocacy,” andparties funded multi-level electoral activities in part with funds that were not subject to federal contribution restrictions (known as “soft money”), not to mention the massive use of PACs.

Simply put, in spite of the intentions of the legislature, players have campaigned for and against specific candidates for federal office with unlimited amounts of unregulated resources. Believe it or not, BCRA was the legislature’s attempt to stop this circumvention. The major provisions of BCRA were restrictions on political party soft money and independent corporate and union issue advertising during election campaigns.

From the start, the Court rejected a host of constitutional challenges and upheld all the major provisions of BCRA,14)McConnell v. Federal Election Commission, 540 U.S. 93 (2003). but “the single greatest legal victory for campaign finance regulation”15)Briffault 2004, 147. did not last long. The replacement in September 2005 of Chief Justice William Rehnquist with Chief Justice John Roberts, concomitant with the replacement of Justice Sandra Day O’Connor with Justice Samuel Alito in February 2006, started the greatest period of deregulation of campaign financing since before Congress passed the FECA amendments of 1974.

The infamous Citizens Unitedv. FEC,16)558 U.S. 310 (2010). given in January 2010, held unconstitutional a key provision of BCRA.Interestingly, prior Roberts Court decisions had already limited BCRA’s ban on corporate electioneering communications,17)FEC v. Wisconsin Right to Life, 551 U.S. 449 (2007); Davis v. FEC, 554 U.S. 724 (2008). so the real importance of the case is in narrowing the meaning of corruption,18)Kang 2012; Gerken 2015. and in the ethos and habitus it has encouraged.The Court has conceded that large donations create special access to politicians, but it insists that this is an illegitimate target of regulation.19)558 U.S. 310, 359 (2010). “[I]ngratiation and access”, the court declared, “are not corruption.”

Likewise, the Court has determined that Congress can regulate only “quid pro quo corruption,” or the appearance thereof.20)Ibid, ibid. In McCutcheon v. Federal Election Commission,21)134 S. Ct. 1434 (2014). the Supreme Court invalidated the aggregate contribution limits, continuing with the active conservatism that has characterized Roberts Court jurisprudence. By so doing the Court permits wealthy individuals to give contributions to as many candidates in as many differentconstituencies as they want.

So are we to blame the judges for the condition of campaign financing? A lot of scholars would say yes, but not all mainstream and first-rate scholars would agree.

Three major camps/paradigms have evolved during the last half-century. These paradigms—the skeptical, the reformist, and the reluctant-radical—provide us with different answers for the question of who is to blame about the poor condition of campaign financing and what is to be done to solve this issue.

The first camp of scholars tends to support the Court, and if they blame politicians it is not for not regulating campaign financing but rather for over-regulating the economy. The libertarians in this camp valorize individual rights andtreat existing distributions of resources, including money or ownership of media, and the use of these resources, as if they were pre-political and just.22)For elaboration and criticism, see: Sunstein 1994, 1397 – 1399. In addition, they presuppose that an activity free from governmental intervention is always better than a regulated one. Political campaigns, as well as campaign financing, is understood in terms of the First Amendment and of free speech doctrine.23)Ortiz 1999, 1219 – 1220.

Furthermore, speech that is related to campaigns “is the very heart of expression on matters of self-governance.”24)Issacharoff and Karlan 1999, 1712. The public, according to this view, has the duty to decide what to listen to, and he can vote for any reason he likes.25)Powe 1982, 281.The amount of money spent on contributions allowed citizens to express their views effectively, but also to express the intensity of their political and policy preferences. Others emphasize that restrictions on campaign donations and expenditures reduce the information reported to citizens on the shortcomings of politicians or the superiority of alternative candidates.Therefore, more speech, expressions, and conveyance of messages is always better than the regulation of speech, which in the end leads to less speech.

The ultimate cure for the problem of campaign financing is removing the possibility of extensive forms of property and economic regulation from Congress. If that were done, there would be far fewer incentives for interest groups and corporations to “bribe” candidates via campaign expenditures and contributions.26)Epstein 2004, 233.

Another group of skeptics emphasizes that no regulatory scheme is neutral, and politicians will, given the chance, regulate campaign finance to serve their own electoral interests.27)BeVier 1994; Gottlieb 1989; Smith 1989; Sullivan 1998. Other skeptics believe that regulation usually has very bad unintended consequences. The hydraulic argument against a reform rests largely on the fear of moving from an insider’s to an outsider’s model of politics.28)Issacharoff and Karlan 1999. On the one hand, regulation enfeebles political parties, increases the amount of “dark money” in the system, and enhances the role of outside players in the political process.

More generally, eliminating the political influence of money will likely elevate the political influence of other endowments. On the other hand, wealthy individuals will simply divert money to other outlets, such as issue advocacy/independent expenditures and Super PACs.29)Issacharoff and Karlan 1999, 1713; Lochner and Cain 1999, 1935.

The hallmark of the second camp of scholars is a sympathy to campaign financing regulation. This camp accepts that some contributions and independent expenditures are forms of speech, but there are other reasons that corporations, interest groups, and the very wealthy few spend money in the context of campaigns, which are often more important: it’s to determine the composition of the representatives or to influence legislatures.

In sharp contrast to the rhetoric of the current Court, most of the reformists presuppose that ordinary people have only limited power vis-à-vis the economic elite and interest groups, and they have the right to get protection from the state. Taken together, these are among the major reasons that a regulation of campaign financing is so badly needed.30)Ortiz 1998.

Finally the third camp, called here the reluctant radicals, also criticizes the condition of American campaign financing, but for them the root of the problem is neither the Court’s jurisprudence nor politicians. Rather, the root of the problem is the uneasy relationship between capitalism and democracy.Some of the reluctant radicals believe that the root of the problem is representative democracy and its inherent connection to elections,31)Guerrero 2014; see also: Manin, Przeworski, and Stokes 1999. while others put it on the (market-) capitalist system.32)Rahman 2016. However, the reluctant radicals are neither Marxian nor socialists, for none of them accept the idea that democracy and capitalism are incompatible (thus their radicalism is reluctant).

Yet, there are also important agreements in the scholarship about the problematic nature of campaign financing and about how to approach the subject. Reformists, reluctant radicals, and even a few skeptics are in agreement that campaign financing is taking place inside of institutional structures and social relations, which affects “how that money gets raised, by whom it gets raised, and where it goes.”33)Briffault 2007, 831; Issacharoff and Karlan 1999, 1734; Ortiz 1999b, 1743. The field includes activities of various players, including judges, policymakers, regulators, corporations, non-profit organization, and more.34)Overton 2013; Tokaji & Strause 2014. In particular, there is a growing agreement that to understand the current system we must also understand lobbying.35)Tokaji & Strause 2016, 224.

The scholarship points out that in the last decades a two-tiered campaign process had evolved: one, based on candidates and political parties, which is regulated; the other, based on corporations, non-profit organizations that are related to business, very wealthy individuals, interest group, etc., which are exempted form disclosure and expenditures limitation, with a lot of power and influence on campaigns and politicians.36)Issacharoff and Karlan 1999, 1717. The latter uses “outside spending.” This kind of spending, which has become dominant since Citizens United, has made it harder for candidates to control their message in campaigns. It also leads to an increase in time spent fundraising and heightened polarization.

Lastly, much of the outside spending in federal elections today comes from groups that do not publicly disclose their funders (“dark money”). “The Supreme Court is a special player, which is perceived as largely responsible for this situation.”37)Hellman and Schultz 2016, 208. Not only does the court put “absurd limitations on the government’s compelling interest in effectively combating corruption,”38)Kang 2016, 607. but its approach to the subject is misguided.

There is a growing acknowledgment among non-libertarian scholars that responsiveness to contributors and entities, such as corporations and non-profit organizations that are supported by businesses engaged in outside spending, often contradict responsiveness to constituents.39)Briffault 2015; Gilens and Page 2014. There is also close to a consensus that, one way or another, the financing of American politics has largely remained the province of those who have material resources, “with little role for everyday Americans.”40)Sarbanes and O’Mara, 2016.

One of the hotly debated issues in the literature is the meaning of corruption. While skeptics define corruption solely as quid pro quo (and the prevention of individual quid pro quo corruption as the only legitimate goal of regulation),41)See for example: BeVier 2004. Smith (2002), one of the prominent skeptics in the field of campaign financing regulation, asserts that this definition is too broad. For Smith, if the motivation of the politician is office, and not personal gain, there is no corruption. Likewise, he argues that in Buckley the Court put forward a misguided conception of corruption. the majority of scholars are concerned about other kinds of corruption as well, whether they call it corruption or not (for example, some call it “anti-plutocracy” and conceive it as a form of inequality). The harm that the scholarship deals with is not necessarily rooted in the wickedness or greed of politicians. It is rooted in institutional arrangements, habits, power relations, and political economy, and it creates challenges.

The corruption, according to the scholarship, may be founded in one or more levels: in the citizenry,42)For elaboration about the corruption of the citizenry and criticism, see: Issacharoff and Karlan 1999. the willingness to compete in public office,43)Sarbanes and O’Mara. 2016. the party level,44)Kang 2016. the electoral process, the composition of the democratic bodies, the governmental decision making, and the political order in its entirety.45)Raskin and Bonifazt 1993, 277; Tokaji & Strause 2014, 78. That way, it is not with coordination but rather with cooperation, not with explicit threats but rather by anticipation of negative independent campaigns that affect the way legislators behave.

In this regard, one of the biggest problems today is that independent spending is perceived as a real risk(or threat) to the political career for those who refuse to advance policies that are consistent with the very wealthy few, corporations, interest groups, and the like.

There is yet an open question of what kind of corruption deserves regulation, and whether the talk about corruption is not actually a disguise for other concerns. This possibility leads us to one of the biggest questions in the literature: what is the goal of campaign financing regulation?We turn to this issue next.

The goal

Scholars still disagree about the best way to define the goal of campaign financing regulation. Some scholars have adopted a positive way to define it (self-government,46)Hellman and Schulz 2016, 211-212 for references. electoral integrity,47)Post 2014. alignment48)Stephanopoulos 2015. and the promotion of political equality),49)Hasen 2016; Strauss 2015. For other prominent scholar who define the goal of campaign financing regulation as equality, and apt criticism, see:Pevnick 2016a. while others prefer to focus on the problems that are associated with practices of campaign financing (corruption,50)Teachout 2009. conflicts of interest,51)Lowenstein 1989. institutional corruption,52)Thompson 1995. electoral corruption,53)Thompson 2005. dependency corruption,54)Lessig 2011. group-level corruption,55)Kang, 2016. misrepresentation, distortion/distorting the communion of interests and loss of faith in democracy).56)Brown and Martin 2015.

On the other hand, there is almost a consensus that the superior access and influence of wealthy interests can justify campaign finance regulation (or de-regulation).57)Tokaji & Strause 2016, 228. Another agreement is that the goal of campaign finance regulation is multidimensional,and it is not reducible to the avoidance of reality or appearance of criminal bribery or quid pro quo corruption. The regulation of campaign financing thus ought to accommodate multiple concerns, some of them competing: self-government, freedom of speech, governmental performance, political equality, electoral competitiveness, and no less important, the prevention of corruption.58)Briffault 2008, 42; Pevnick 2016.The challenge is basically to execute this principle in concrete reforms, and to tailor a reform.

There is a new acknowledgment in the literature that there is uncertainty about the effects of particular campaign finance laws.59)Briffault 2007, 831. Another insight is that the very wealthy few, corporations, interest groups and other powerful players that wish to influence elections, the composition of the congress, the legislative process, and the administration of the law are “moving targets.”60)Issacharroff and Karlan 1999, 1707.That is, there is a place for caution in campaign finance reform proposals.61)Sunstein 1994, 1411.One of the practical goals of regulation thus might be to decrease the power of money by forcing it into ever less efficient means.”62)Ortiz 1999b, 1745.More generally, it seems better not to focus only on the face of rule-based regulation and instead to embrace a newemphasis on broader issues, such as power relations and economy.63)Sarbanes and O’Mara 2016.

Is there anything we can do?

The democratic control of campaign financing, which characterizes the American state, has not pretended to tame the very wealthy once and for all. The experience of regulation of campaign financing in the last four decades, however, tells us that the “donor class” found ways to turn wild once and again, usually with the support of the Supreme Court.One of the results of the crisis of campaign finance regulation is that capitalism has become ungovernable. As some scholars suggest, this might be one of the reasons that capitalism is unsustainable, and countries like the U.S. suffer from crony capitalism.

Ironically, the fact that prominent scholars from first rank universities talk about systemic corruption in campaign financing and about inequality mean that America is not as corrupt as one might think.

Two questions that the scholarship has been dealing with are whether the Constitution permits a comprehensive regulation of campaign financing, and what to do withcircumvention, or the exploitation of loopholes, in campaign finance regulation.

I would like to pose, as an open end to this post, another question: Do a sufficient number of wealthy Americans, corporate managers, and other powerful people love their country and their freedom enough to restrain themselves, even if the law does not, or cannot, force them to do so?

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.

See for example: BeVier 2004. Smith (2002), one of the prominent skeptics in the field of campaign financing regulation, asserts that this definition is too broad. For Smith, if the motivation of the politician is office, and not personal gain, there is no corruption. Likewise, he argues that in Buckley the Court put forward a misguided conception of corruption.

42.

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For elaboration about the corruption of the citizenry and criticism, see: Issacharoff and Karlan 1999.

43.

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Sarbanes and O’Mara. 2016.

44.

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Kang 2016.

45.

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Raskin and Bonifazt 1993, 277; Tokaji & Strause 2014, 78.

46.

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Hellman and Schulz 2016, 211-212 for references.

47.

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Post 2014.

48.

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Stephanopoulos 2015.

49.

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Hasen 2016; Strauss 2015. For other prominent scholar who define the goal of campaign financing regulation as equality, and apt criticism, see:Pevnick 2016a.